The Political Economy of the Japanese Financial Big Bang

Institutional Change in Finance and Public Policymaking

Tetsuro ToyaEdited by Jennifer A. Amyx

One of the first studies to comment on the role of the public in Japanese policymaking

Emphasizes change over continuity in Japanese politics

Accessibly written to appeal to political scientists, economists, and policymakers

The Political Economy of the Japanese Financial Big Bang

Institutional Change in Finance and Public Policymaking

Tetsuro ToyaEdited by Jennifer A. Amyx

Description

In 1996, the Japanese government introduced a policy package initiating massive deregulation and liberalization in the nation's financial sector, referred to as Japan's financial 'Big Bang.' This book argues that the emergence of the Big Bang Initiative poses numerous challenges to conventional interpretations of Japanese politics and represents a clear case of institutional change in Japanese finance. Whereas many observers stress continuity in Japanese politics, this book argues that the emergence in the 1990s of performance failures and scandals attributed to the bureaucracy, as well as the increase in the likelihood of a change in government in this period, led policymaking patterns surrounding the Big Bang to differ radically from those dominating public policymaking in the past.

These developments led to change in the nature of the alliance between the ruling Liberal Democratic Party (LDP) and the Ministry of Finance (MOF), to a shift in priorities within the MOF, and to a heightened role for the public in policymaking. The result was that the MOF, long perceived as 'entrenched' and seeking to maximize tangible tokens of organizational power, became more than willing to launch the Big Bang, despite the fact that these reforms would strip the ministry of many of its regulatory tools and sever the ministry's close ties with the financial sector. The book also argues that these new developments prevented financial industry actors from forestalling these reforms, as they had done in the past with other reforms similarly threatening the viability of weaker firms. The findings reveal that not only politicians, but also bureaucrats and interest groups, have reasons to pursue public support to enhance their respective political influence. Consequently, well-organized groups do not always prevail over the unorganized public.

The Political Economy of the Japanese Financial Big Bang

Institutional Change in Finance and Public Policymaking

Tetsuro ToyaEdited by Jennifer A. Amyx

Table of Contents

Foreword Preface 1: Did Japanese politics change in the 1990s?Analytical framework 2: A rational actor approach 3: How do systems change? Actors, preferences, strategies, and institutions in financial politics 4: Economic realities of the Big BangAnalysis of financial politics 5: A political analysis of the emergence of the Big Bang Initiative 6: Financial industry influence on financial reforms 7: New developments in bureaupluralism in financial policymakingThe meaning of change 8: Institutional change in the Japanese political economy 9: Conclusions

The Political Economy of the Japanese Financial Big Bang

Institutional Change in Finance and Public Policymaking

Tetsuro ToyaEdited by Jennifer A. Amyx

Author Information

Tetsuro Toya, The late

Edited by
Jennifer A. Amyx

The Political Economy of the Japanese Financial Big Bang

Institutional Change in Finance and Public Policymaking

Tetsuro ToyaEdited by Jennifer A. Amyx

Reviews and Awards

"...worthwhile reading for anyone interested in the political economy of financial liberalisation in Japan." - The Financial Regulator